Obama's debt relief plan could spare Florida up to $500M, White House says, but could hurt later
Florida would not have to pay back between $400 million and $500 million in jobless insurance debt owed to the federal government over the next two years under a plan President Obama will outline next week, the White House said.
Obama has to sell the moratorium to Congress as part of his 2012 budget proposal and is counting on pressure from hard-hit states like Florida and Michigan. But some Republicans in Washington were cautious or even critical Tuesday, worrying about unemployment higher taxes that could come after the grace period is over. Others deemed it another bailout.
Regardless, the debt is a massive issue. Florida borrowed more than $1.8 billion as its unemployment funds dried up. In December, the state began notifying businesses that taxes will have to go up this year. In some cases, they will triple, the St. Petersburg Times reported.
To raise money after 2014, Obama will propose increasing the taxable income level for unemployment insurance from $7,000 to $15,000. The current level has been in place since 1983.
The Associated Press explained that the federal tax rate used for unemployment insurance would be cut in half, meaning the federal government would not see an increase in revenue from the adjustment. But states would be allowed to use the new income level to raise more money from employers, allowing faster repayment of debt.